Did the Rabbis Believe Their Own Midrashim?

 Did the tanaim and amoraim believe that the midrashim they created (Assuming at least some of them were created) were telling a true history, or were useful spiritual tools, but never intended to reflect reality? This question never really bothered me - as I felt it was obvious that some midrashim were never meant to be interprented literally. However, over time I've met more and more people who seem to believe certain midrashim were historical. I started wondering when did people start to believe that all midrashim are meant to be taken as an historical truth. This quickly led me to the question of whether those creating the Midrashim thought they were uncovering history, or whether they believed that their Midrashim are spiritual if not historical truths.

It is evident to me, that there will not be a simple Yes/No answer to all midrashim, Rabbanim or periods of time. However, I believe that trying to find a broad answer is still informative, even if it must be followed by a qualitative  "Lets check the individual case".

I found an essay on this very topic by Chaim Milikowsky "Midrash as Fiction and Midrash as History: What Did the Rabbis mean?" and available in its entirety on Google Books. His answer is that Rabbis did not believe they were telling history. His opinion is based on these arguments:

A. A lot of psychological and historical conjecture that you can either agree with or not.
B.  "Seder Olam Rabba" the classical midrashic work which attempts to date all events from the creation of the world until the end of the first temple, does not date any event that is not specifically mentioned in the bible.
This is a convincing argument, in that it shows that the author of seder olam rabbah did not feel there was a need to date events mentioned in the midrash (like Abraham being thrown into the fire). This shows both an awareness of the difference between the tanach and midrashim, and by the choice not to include midrashim in a text setting chronology- the belief that events described by midrashim  are not historical. Seder Olam uses midrash to determine dates - but does try to date events not in the bible.
C. "Yaackov Avinu is not dead" - An interpentation of this famous midrash as found in Ta'anit 5b. In the story  R' yitzhaq tells his view that Jacob is not dead, based on an exegesis from Jermiah. When asked how this view is possible, since Jacob was embalmed and buried, he answers that he explaining scripture (מקרא אני דורש). Milikowsky understand this answer as saying that he does not believe his view is historical - merely a religious fiction based on a singular verse. Ergo - at least one rabbi seperated midrash from historical truth. The problem with this argument is that traditionally quite a few big rabbanim (Rashba comes to mind) seem to understand the passage in the completely opposite fashion - i.e that the conclusion of the discussion is that Jacob in fact did not die.  Milikowsky's reading (which I like)  is far from being the only possible reading of that story, and hence can not be a cornerstone of his proof.

These are the only proofs given to his view, which rely on Midrashic sources and not general theorizing. I found the argument deriving from Seder Olam Rabba to be relatively convincing as opposed to his argument from the Jacob isn't dead midrash- which at any rate is one midrash in the sea of the talmud. However it seems that his article didn't really prove his view, and that there is much work to be done on this topic.

Part two coming soon!